1. At a Glance – The Comeback Kid or Coal Drama Season 12?
Bihar Sponge Iron Ltd is currently sitting at a market cap of ₹133 crore, trading at ₹14.8 per share, with a P/E of 9.88. On the surface, it looks like a classic “cheap metal stock” with quarterly sales of ₹87.30 crore and PAT of ₹6.21 crore in Q3 FY26 (December 2025 quarter). Quarterly profit jumped 229% YoY and sales surged 63.8%. Sounds like Diwali bonus season, right?
But wait.
Operating margins are still negative at -1.32% for the latest quarter. Book value is negative at ₹-4.60. Promoters hold 69.23%, but 52% of that is pledged. Debt stands at ₹27 crore as per the latest September 2025 balance sheet. ROCE? A modest 11.38%.
And just when things seemed to stabilize, the facility user Vanraj Steels stopped plant operations abruptly on 6 February 2026.
So the real question is: is this a phoenix rising from 2013 shutdown ashes… or is this just another episode in the coal-supply courtroom saga?
Let’s investigate.
2. Introduction – From Shutdown to Setup to Shut Again?
Bihar Sponge Iron Ltd was incorporated in 1982. It manufactures sponge iron – the pre-reduced form of iron used in steel production. Simple business. Heat iron ore with coal, remove oxygen, sell the output.
Except nothing has been simple here.
In August 2013, operations were shut down due to sudden stoppage of coal supply by Central Coalfields Limited under a long-term fuel supply agreement. Plant gone silent. Revenues vanished.
Fast forward to December 2020. The company signed a Facility User Agreement with Vanraj Steels Private Limited. After renovation and overhauling, the plant was handed over on 12 January 2022.
Vanraj operated the plant, then shifted to a conversion model where Bihar Sponge supplied raw materials and bought back finished goods.
Sounds clever, right? Asset-light-ish without running full operations risk.
But in February 2026, Vanraj abruptly ceased operations again.
Is this a steel business or a Netflix courtroom documentary?
Let’s understand what exactly they do.
3. Business Model – WTF Do They Even Do?
Primary business: manufacturing and selling sponge iron.
Installed capacity: 2.10 lakh MT per annum from 3 kilns in Jharkhand.
Secondary activity: trading plastic packaging materials. Because why not add some packaging on the side?
Revenue breakup in FY22:
- 61% from sale of sponge iron
- 39% from trading packaging goods
So it’s part industrial furnace, part trader.
They also have a 5 MW power plant based on dolo char (a by-product of sponge iron manufacturing). Since they couldn’t consume all of it, they entered into an agreement with G S Pharmbutor Pvt. Ltd. for power utilization and sale.
And in FY25, they sold the obsolete 5 MW power plant for ₹1 crore to a related party.
So we have:
- Coal supply disputes
- Facility user agreements
- Power plant sale
- Loan repayment MoU with related party
- Writ petitions over ₹215.28 lakh coal penalty
- Supreme Court and High Court appearances
You wanted a boring steel company? Sorry, this is full masala.
Now let’s open the numbers.
4. Financials Overview – Q3 FY26
EPS Annualisation Rule:
For Q3 → Annualised EPS = Average of Q1, Q2, Q3 EPS × 4
EPS:
- Jun 2025: ₹0.24
- Sep 2025: ₹0.19
- Dec 2025: ₹0.69
Average = (0.24 + 0.19 + 0.69) / 3 = 0.373
Annualised EPS = 0.373 × 4 = ₹1.49
Current Price ₹14.8
Recalculated P/E
